The new tax year is here, so it’s time to take a look through the major changes coming in for 2019/20. At RIFT, staying up-to-date with this stuff is the key to keeping our services right at the cutting edge. Here are the main headlines:

Personal Allowance

The good news for more or less everyone is that the amount of income you can rake in before paying tax is on the rise. Last tax year, the first £11,850 of your earnings were untaxed. For 2019/20, that number’s been nudged up to £12,500. Long story short, everyone who qualifies for the standard Personal Allowance will be getting an additional £650-chunk of their income untaxed – worth £130 more a year in your pocket.

Tax bands

The thresholds for the various tax rates are shuffling about a bit as well. Before the 6th of April, you’d start paying the higher rate of 40% as soon as you made £46,351 a year. That cut-off point’s been raised this year to £50,001. That means the new bands look like this:

  • Personal allowance (up to £12,500): 0%
  • Basic rate (£12,501-£50,000): 20%
  • Higher rate (£50,001-£150,000): 40%
  • Additional rate (over £150,000): 45%

Scottish tax bands

Scotland has the right to set its own bands and thresholds for Income Tax, so those are now starting to drift away from the rest of the UK’s. Here’s what you’ll be paying if you’re a Scottish taxpayer.

  • Personal Allowance (up to £12,500): 0% Starter rate (£12,500-£14,549): 19%
  • Basic rate (£14,549-£24,944): 20%
  • Intermediate rate (£24,944-£43,430): 21%
  • Higher rate (£43,431-£150,000): 41%
  • Top rate (over £150,000): 46%

Remember that, if you’re in the Armed Forces and paying Scottish tax, there’s a special scheme to make sure you don’t end up paying more than other MOD personnel.

National Insurance

Of course, Income Tax isn’t the only way HMRC gets its fingers into your pocket. You’ve also got National Insurance to worry about. Once again, those bands are moving. Let’s compare last year’s thresholds with the new ones:

  • 2018/19: 12% on earnings between £8,424 and £46,384. 2% on anything over that.
  • 2019/20: 12% on earnings between £8,632 and £50,000. 2% on anything over that.

In this case, higher earners are going to end up paying more, since more of their income will fall into the higher 12% bracket. If you’re self-employed, on the other hand, the rates look like this:

  • Class2: £3.00 a week.
  • Class 4: 9% on profits between £8,632 and £50,000. 2% on profits over that.

The new band for Class 4 NICs is higher than the 2018/19 one, which kicked in at £46,350. Again, this hits higher earners a little harder than before. Meanwhile, Class 2 NICs have gone up by a flat 5p a week.

Anything else?

Those are the big changes that most people are going to notice, but other things are changing in the new tax year as well. The Annual Investment Allowance (AIA), for instance, is rocketing up from £200,000 to a full £1 million. The AIA is a rule that lets businesses deduct the value of “plant and machinery” from the income they’re taxed on. This tends to cover things like computers, tools and office furniture, but it’s a pretty broad term. That big boost to AIA is only going to last for 2 years, though – so now’s the time to make use of it if you can.

Whatever the new tax year brings, make sure it includes a well made tax refund with RIFT.

How RIFT can help.

If you haven't claimed with RIFT before, check for free if you're due a tax refund for your travel and expenses from April 2015 - April 2019. The average four year claim is worth around £2,500.

If you've claimed with us before and want to get your next refund back in your wallet, get in touch by phone or email to get your claim rolling.

If you're self employed, CIS or need to let HMRC know about any other income outside of your PAYE job now the 2018/19 tax year has ended get in touch and we can complete your self assessment tax return for you.

Whatever kinds of taxes you’re paying, you’re better off with RIFT.